1. Compound interest (perpetual exponential growth, defined as a percentile) is mathematically unsustainable. It will either create a hyperinflationary death spiral as seen in the Weimar Republic, or redistribution of the limited resources, with ever-increasing concentration of the resources in the hands of those who had more to start with.

That’s how interest (especially compound interest) works; the more money you have, the faster you accumulate more interest proceeds. (That’s why there are thousands of shills proclaiming “make your money work for you”; interest does the work, and the “investor” does nothing.) Taken to a logical conclusion, without inflation of the money supply, the ultimate endgame has all of the money in the system in the hands of the single entity who took the best advantage of interest. (Typically, that’s also the entity who had the biggest piece of the pie when interest started counting.) With inflation, it’s actually the same endgame, it just takes longer.

2. Finite worlds (like the one we live on) are zero sum. There are only so many resources to go around. It’s basic physics: you cannot make more of something, matter or energy, without adding to the finite state from somewhere outside of the system. (And yes, the irony of the wiki link on “zero sum” showing a misunderstanding of the math as applied to an economy is not lost on me.)

I suppose, to be fair, Earth is continually bombarded with a great deal of energy from the Sun, so from an energy standpoint, we’re not truly zero sum… but it’s interesting to me that in all the fuss over “energy independence”, we still talk of using up the finite resources here on the planet, all while largely ignoring solar power, our only significant source of long term sustainable energy.

3. The “investment society” that drives our cultural obsession with Wall Street, retirement investing and ROIs is built on the notion that a percentage of “returns” on our investments is healthy and desirable. In reality, it is parasitic and inflationary. Demanding perpetual growth of companies that we “invest” in is setting them up to fail. They can no more fight the realities of math than they can fight the laws of physics. This is why we see companies, even huge ones, turning to the bailout bar, sucking at the teats of the taxpayer. They cannot sustain operations at the level of demand that investors have placed on them. It’s a mathematical impossibility. (And all the bailouts in the world will not help; they merely siphon taxpayer money to the bailout beneficiaries, throwing even more of our money into a financial black hole. The best it can do is stall the inevitable.)

To be fair, there have been a ton of fraudulent activities involved, including fiat money supply and fractional reserve lending, but underneath it all is the drive for an ever-increasing slice of the pie that interest promises. Crashes are inevitable, as the supply will never keep up with demand, and the disparity accelerates as time goes on in an interest-based regime.

4. Nothing will stave off the inevitable crash of a system built on perpetual growth and interest. It is built to fail, collapsing into a financial singularity, with the resources concentrated in very few hands. Crashes will accelerate and be more severe, mitigated temporarily by shuffling the deck chairs, but there is no other possible outcome. That’s the inevitable nature of the intersection of the infinite and the finite. It’s not market psychology, it’s not sociology, it’s not politics. It’s pure math.

So what of “sustainable business“? The politically correct buzzword is rooted more in sociology and feel-good PC terminology. The only truly sustainable business is one that is mathematically stable. That means no interest. It means providing a valuable service at a fair price and maintaining cost parity with the effort required to provide the service. It means an honest day’s work for an honest day’s pay.

The current worldwide economic meltdown is a fight against the inevitable. We will wither adopt truly sustainable practices or we will see increasing income disparity, social upheaval and hyperinflationary deaths. Iceland has already declared bankruptcy as a nation. Finite beings, whether nations, businesses or individuals cannot fight the mathematical demands of perpetual growth. Criminals will work the system and profit handsomely during the collapse, but unless systemic changes occur to reflect the reality of life in a finite world, the endgame is assured.

Melf, I’m not so sure that capitalism itself is to blame; if the system were built on fair valuation and a monetary standard (gold or otherwise), we’d not be seeing these sorts of trouble. It’s the interest/usury (and fiat money and fractional reserve lending) that drives the fraudulent exponential “growth”, not so much the exchange of money for goods.

Just a quick note on the solar energy: currently, we have few different ways of harnessing it. Mainly, solar panels. The problem with solar panels are currently twofolds:
-> Their construction generates a VERY high rate of pollution. Which is rather ironic for something presented as ecological.
-> Their efficency is far from perfect. (see wikipedia). The best ones are currently at a 15% maximal efficiency (attained during a clear winter day, maximum exposition, bla bla bla), which means at best 150W/m²
But they are working on improving them.
I personnaly think that, instead of solar panel “farms”, degrading thousands of acres of greenland, they should install them on skyscrapers’ roofs. Almost no one uses roofs, after all…

Agreed, Modran. There is a lot more that could be done to make solar energy capture more efficient. It’s expensive to do the research and development to make things like the production process better, and that takes a focus on the long term. Most businesses, governments and people play in the short term.

Well, that, and the U.S. government is more focused on bailing out the “Big Three” car makers and things like corn ethanol. The “green” church of Al Gore has some interesting priorities.

I like the idea of using rooftops, even in residential areas. No, it won’t be useful in all areas (Oregon or London, for example), but there would be areas that it would make sense. There’s plenty of desert out there as well.

It makes perfect sense to stay on a gold or silver standard to everyone except those who want to make exponential amounts of money using little effort. Big businesses and banks hate the idea of a gold standard for a couple of reasons that I have pulled out of my top hat.

First, gold by nature is a finite resource and as such is guaranteed to be deflationary with time. Take the total amount of gold reserves, divide it by the population of 1970 then 1980 and the picture becomes clear: gold not only retains ALL of its original value, but actually becomes more valuable with population growth. This simply couldn’t be allowed to happen, hence the gold heist of April 3, 1933.

Second, businesses-like people-want money right now and very few (especially publicly traded companies) want to wait for the funds to become available much less save until they are. Under a GS, money for business expansion would have to come from profits SAVED by the company, not “new” money created from nothing. This form of expansion demands fiscal responsibility from company A and decreases the chances of that company receiving an authorized heist….. daarrghh I mean bailout 😉 from taxpayers since there is little chance for a domino effect to begin. Publicly traded companies imo should be illegal because they add insane amounts of pressure to grow! grow! grow! and little incentive to remain modestly profitable. Couple that with fractional reserve fiat money and a domino effect is guaranteed by design.

Soooo, the question, now that we have identified the problem, is what to do? What economic system would be sustainable as well as profitable to all parties involved? Furthermore, now that the fractional reserve parasite is so much a part of reality, how could it be scaled back out of existence without the bankers deciding to use a nuclear explosion as a diversion?

Chris, solar panels on a windmill? Interesting… Modran’s right in that they wouldn’t always be in the right orientation… but it might just be worth it if the panels themselves are modular, windproof and cheap.

I also have to wonder about solar collectors. These aren’t solar cells in power generating panels. They are parabolic arrays of mirrors (no photovoltaic technology, in other words) that focus sunlight into a tight focal point in order to generate a lot of heat. This is usually used to boil water to power a traditional steam generator. (It’s like melting crayons or lasering ants with a magnifying glass, only this uses mirrors so it doesn’t need a big precision lens.) No, it wouldn’t always be practical, but there’s a LOT of radiation coming from our local star that could be harnessed.

Wind and water power are driven largely by the sun and the spin of the planet (winds are created by temperature differentials that happen as the planet turns under the light, and water currents have similar properties). That’s why I don’t count them in my comment on a zero sum system. That said, you’re both right, there’s a good deal of energy to be harnessed there, too. Perhaps they aren’t enough to completely replace fossil fuels, but they are certainly enough to be cogs in a more comprehensive energy replacement solution. There’s also a lot to be derived from nuclear power, and even that’s part of the zero sum system.

Wolfgang, your comment deserves a response, but I want to ponder it a bit more. Suffice it to be said for now, I agree with your assessment, and great points.